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Capstone Companies, Inc. Reports First Quarter 2015 Results

FOR IMMEDIATE RELEASE  

DEERFIELD BEACH, FL, May 15, 2015Capstone Companies, Inc. (OTCQB: CAPC) (“Capstone” or the “Company”), a designer of innovative LED lighting solutions including power failure lighting, today reported its financial results for the first quarter of 2015.

Stewart Wallach, Capstone’s CEO, commented, “The first quarter results came in about where we anticipated they would.  The transition from Capstone branded products to the new Hoover® LED Home lighting products brand resulted in a disruption to sales that was required to minimize product buyback expenses before rolling out the new brand.  We expect to see some additional impact from this process again in the second quarter.

“As you may know, we also debuted our largest product expansion in the history of Capstone just last week during the 2015 National Hardware Show in Las Vegas.  I am pleased with the reactions our new products received.  It was very gratifying to see first-hand the positive response to our innovative and unique offerings.”   

First Quarter Review

Revenue was $0.7 million for the first quarter, down from the prior-year’s first quarter mostly because of the cancelation of retailer promotional opportunities due to the West Coast ports dispute, the Company’s decisions to exit the book light category in 2014 and the transition to the new Hoover® branded product lines.   

Gross profit was $1.2 million in the first quarter of 2014.  Gross profit margin as a percent of sales was 43.1%.  First quarter 2015 gross profit margin included the reversal of an accrual related to product promotion allowances, which benefited gross profit margin by approximately 19 percentage points

Operating expenses were $0.7 million compared with $0.8 million in the first quarter of 2014.  

Net loss of $0.4 million compared with net income of $0.3 million in 2014’s first quarter.

Webcast and Teleconference to Review Results and Outlook

The Company will host a live webcast and conference call on Monday, May 18, 2015 at 10:30 a.m. ET.  During the call, management will review the financial and operating results and discuss the Company’s corporate strategy and outlookThe conference call can be accessed by dialling (201) 689-8562.  The listen-only audio webcast can be monitored at www.capstonecompaniesinc.com.

A telephonic replay will be available from 1:30 p.m. ET the day of the teleconference until Monday, May 25, 2015.  To listen to the replay of the call, dial (858) 384-5517 and enter replay pin number 13608259.  Alternatively, the archive of the webcast will be available on the Company’s website at www.capstonecompaniesinc.com.  A transcript will also be posted to the website, once available.

About Capstone Companies, Inc.
Capstone Companies, Inc. is a public holding company that engages, through its wholly-owned subsidiaries, Capstone Industries, Inc., Capstone Lighting Technologies, LLC, and Capstone International HK, Ltd., in the development, manufacturing, logistics, and distribution of consumer and institutional products, including the Hoover® LED Home lighting product line, to accounts throughout North America and in international markets.  See
www.capstonecompaniesinc.com for more information about the Company and www.capstoneindustries.com for information on our current product offerings.

FORWARD-LOOKING STATEMENTS:

This news release contains “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995, as amended.  Such statements consist of words like “anticipate,” “expect,” “project,” “continue” and similar words.  These statements are based on the Company’s and its subsidiaries’ current expectations and involve risks and uncertainties, which may cause results to differ materially from those set forth in the forward-looking statements.  Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements, include consumer acceptance of the Company’s products, its ability to deliver new products, the success of its strategy to broaden market channels and the relationships it has with retailers and distributors.  Prior success in operations does not necessarily mean success in future operations.  The ability of the Company to adequately and affordably fund operations and any growth will be critical to achieving and sustaining any expansion of markets and revenue.  The introduction of new products or the expanded availability of products does not mean that the Company will enjoy better financial or business performance. The risks associated with any investment in Capstone Companies, Inc., which is a small business concern and a “penny-stock Company” and, as such, a highly risky investment suitable for only those who can afford to lose such investment, should be evaluated together with the risks and uncertainties more fully described in the Company’s Annual and Quarterly Reports filed with the Securities and Exchange Commission.  Capstone Companies, Inc. undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.  Contents of referenced URL’s are not incorporated into this press release.

FINANCIAL TABLES FOLLOW.  THE FOLLOWING SUMMARY FINANCIAL STATEMENT SHOULD BE READ ALONG WITH THE FORM 10-K FINANCIAL STATEMENT FILED BY THE COMPANY WITH THE SECURITIES AND EXCHANGE COMMISSION.

For more information, contact

Company:                                                     

Aimee Gaudet                                                

Corporate Secretary                                      

(954) 252-3440, ext 313                                

Investor Relations:

Garett Gough, Kei Advisors LLC

(716) 846-1352

ggough@keiadvisors.com

 

CAPSTONE COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

UNAUDITED

For the Three Months Ended

March  31,

2015

2014

Revenues

 $      713,517

 $   3,962,369

Cost of sales

        (406,167)

     (2,781,829)

        Gross profit

         307,350

      1,180,540

        Gross margin

43.1%

29.8%

Operating Expenses:
  Sales and marketing

           36,672

         174,672

  Compensation

         361,108

         295,327

  Professional fees

           96,173

           73,781

  Product development

           45,658

         132,330

  Other general and administrative

         121,355

         142,540

       Total operating expenses

         660,966

         818,650

Net operating (loss) income

        (353,616)

         361,890

       Operating margin

-49.6%

9.1%

Other expense:
  Interest expense

          (37,156)

        (101,125)

     Total other expense

          (37,156)

        (101,125)

(Loss) income before tax provision

        (390,772)

         260,765

    Provision for income tax

                     –

                     –

Net (loss) income

 $     (390,772)

 $      260,765

Net (loss) income per common share
Basic

 $                   –

 $                  –

Diluted

 $                   –

 $                  –

Weighted average shares outstanding
Basic

654,010,532

656,093,865

Diluted

654,010,532

815,190,442

CAPSTONE COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

UNAUDITED

March 31,

December 31,

2015

2014

Assets:
Current assets:
   Cash $              147,868 $          313,856
   Accounts receivable – net

                  417,588

              977,597

   Advances

                              –

                14,456

   Due from sterling factors

                  355,053

                          –

   Inventory

                  186,455

              128,984

   Prepaid expense

                  370,125

              358,046

     Total current assets

               1,477,089

           1,792,939

Fixed assets:
   Computer equipment & software

                    14,557

                12,272

   Machinery and equipment

                  299,693

              299,693

   Furniture and fixtures

                      5,665

                  5,665

   Less: accumulated depreciation

                (236,277)

            (223,589)

     Total fixed assets

                    83,638

                94,041

Other non-current assets:
   Deposit

                    12,193

                12,193

   Investment (AC Kinetics)

                  500,000

              500,000

   Goodwill

               1,936,020

           1,936,020

      Total other non-current assets

               2,448,213

           2,448,213

         Total assets $           4,008,940

 $      4,335,193

Liabilities and Stockholders’ Equity:
Current liabilities:
   Accounts payable and accrued expenses

 $             731,968

 $         644,629

   Note payable – sterling factors

                              –

286,945

   Notes and loans payable to related parties – current maturities

               2,171,371

           1,936,679

     Total current liabilities

2,903,339

2,868,253

Commitments and Contingent Liabilities
Stockholders’ equity:
   Preferred stock, series A, par value $.001 per share, authorized
100,000,000 shares, issued -0- shares

                              –

                          –

   Preferred stock, series B-1, par value $.0001 per share, authorized
50,000,000 shares, issued -0- shares

                              –

                          –

   Preferred stock, series C, par value $1.00 per share, authorized
1,000 shares, issued 1,000 shares

1,000

1,000

   Common stock, par value $.0001 per share, authorized
850,000,000 shares, issued 654,010,532 shares

65,401

65,401

   Additional paid-in capital

7,216,491

7,187,058

   Accumulated deficit

(6,177,291)

(5,786,519)

     Total stockholders’ equity

               1,105,601

           1,466,940

     Total liabilities and stockholders’ equity

 $        4,008,940

 $      4,335,193

 

CAPSTONE COMPANIES, INC. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED

 

For the Three Months Ended

 

March 31,

 

2015

2014

CASH FLOWS FROM OPERATING ACTIVITIES:
   Net (loss) income

$         (390,772)

$          260,765

  Adjustments necessary to reconcile net loss to net cash used in
operating activities:
     Stock cancellation

                         –

              (28,875)

     Depreciation and amortization

               12,687

               19,254

     Compensation expense from stock options

               29,433

               17,672

     Accrued sales allowance

            (181,978)

             257,632

     Decrease in accounts receivable

             747,014

          2,720,364

     Increase in inventory

              (57,470)

                (3,728)

     (Increase) decrease in prepaid expenses

              (12,083)

             731,136

     Decrease (increase) in other assets

               14,456

              (33,831)

     Increase (decrease) in accounts payable and accrued expenses

               82,314

            (839,367)

     Increase in accrued interest on notes payable

               34,692

               43,239

  Net cash provided by operating activities

278,293

3,144,261

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment

(2,284)

(10,406)

Net cash (used in) investing activities

                (2,284)

              (10,406)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable

             607,276

          4,012,828

Repayments of notes payable

         (1,249,273)

         (6,507,313)

Proceeds from notes and loans payable to related parties

             200,000

                         –

Repayments of notes and loans payable to related parties

                         –

            (624,077)

Net cash (used in) financing activities

(441,997)

(3,118,562)

Net (decrease) increase in cash and cash equivalents

(165,988)

15,293

Cash and cash equivalents at beginning of year

313,856

436,592

Cash and cash equivalents at end of year

$          147,868

$          451,885

 

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